Condominium Assignments

Need to Know!

An assignee is stepping into the shoes of the original purchaser and will bound by the original agreement of of purchase and sale with the builder

Condominium New Builder Agreement of Purchase and sale are complicated documents and must be reviewed by a lawyer.   These agreements often contain additional costs on closing such as municipal levies that can run into the '000s of dollars.  The original purchaser/assignor and their lawyer may or may not have been agressive about capping those levies.  The new purchaser/assignee must be prepared to have that cash in hand on closing.

New build condominiums have two closings... interim occupancy and final closing.   An assignment agreement may add a 3rd level of closing... ie with the Assignment Agreement "closes"

They way funds are disbursed in a condominium assignment have two components... the original purchaser/assignor deposit that has been paid to the builder and the profit (the different between what the original purchaser/assignee paid and what the new purchaser/assignee is paying.  Those funds typically flow two ways.... 

Original Deposit Paid to Buyer Ahead of Profit

Note:  There will also be an assignment agreement deposit (just like any other deal) held by the listing brokerage.  This is different from the original deposit paid to the builder.

There is an assignment agreement closing date in which the original purchaser/assignor received back their original deposit.  Note... typically this is cash on hand needed by the new purchaser/assignee as a lendor would not advance these funds... because title hasn't changed hands there is nothing for the lender to secure those funds against.  The profit portion is funded as part of the total purchase and is paid out when title transfers (not interim occupancy)

Original Deposit and Profit are blended and paid on Closing

In this instance the original purchaser/assignor is receiving no funds until final closing.

Lastly, with the exception of realtors who are established in the pre-sale market you may find you are suprised at how little the listing agent may know.  Unless they are experienced with assignments, don't rely on them to guide you through the process

This module will focus on the most typical of assignments.  The assignment of a new build condominium.  Note that any agreement can be assigned but this will be the most typical scenario you will run into.   

Occasionally you will run into the assignment of a New Build Detached and as outlined below the builders permission will be required.

Rarely, a residential freehold purchase agreement will be assigned.

This module focuses on representing the purchaser.

If you are representing a client wishing to assign a unit they have purchased prior to close it is important that

• They have the builders permission to assign (there is usually a cost)

• That you have a copy of the original APS ready

• That you check the APS with the builder to see if there is a restriction on advertising.  Most builder agreements will prohibit putting a listing on MLS.

• When counselling your selling they need to understand the flow of funds and that it is unlikely that they will see the profit portion before final close... that depending on market conditions they may not see their original deposit returned until final close.  By that we mean if it is a buyer's market the buyer/assignee will be in the drivers seat and may stipulate the no disbursement of funds happens until the final close... which in some cases could be many, many months away.

It is important to understand that an assignment has it's own OREA form 150 (145 if Freehold)

IT IS NOT COMPLETED ON A STANDARD AGREEMENT of PURCHASE AND SALE.

A copy of the OREA Forms Explained version of 150 is uploaded for your reference below.  The red paragraphs are an explanation and is for reference only.  Do not use the form with the red.

OREA form 150 comes with a SCHEDULE B that must be completed.  This deals with how the funds will be disbursed.  You need to be comfortable and familiar with the math.  Read the description in red carefully!

The rest of your documentation will remain the same

Buyer Representation Agreements (and related forms)

810 Working with a REALTOR®

300 Buyer Representation Agreement – Authority for Purchase or Lease

OR

310 Buyer Customer Service Agreement – Buyer is Not Represented By the Brokerage  (Will change when TRESA is enacted)

320 Confirmation of Co-operation and Representation

  801 Offer Summary Document – For use with Agreement of Purchase and Sale when      requested by Listing Brokerage

630 Individual Identification Information Record

635 Receipt of Funds Record

What is an assignment?

An assignment is essentially a sale of a contract or right to acquire property. An assignment is a transaction whereby the original purchaser (the "Assignor") of a property sells, and thereby transfers, their interest and obligations under the original contract to a new purchaser (the "Assignee"). The Assignee will generally assume all of the Assignor's duties and obligations under the original Agreement of Purchase and Sale. These rights and obligations are stated in the original Agreement of Purchase and Sale and include terms such as interest payments, taxes and maintenance fees during interim occupancy. Upon completion, the Assignee is granted the title to the real property and will incur all final closing costs.

a) Assignor: An Assignor is the original buyer of the unit from the Builder/Developer.

b) Assignee: An Assignee is the buyer of the Agreement of Purchase and Sale from the Assignor.

Is an assignment legal?

An assignment is legally permitted unless otherwise expressly prohibited in writing in the original Agreement of Purchase and Sale.  If a new build, an assignment fee may be charged by the developer and is normally a cost borne by the Assignor (the original purchaser).  In the instance of a New Build Agreement almost all of the builder contracts will contain an assignment provision that require the builder's permission and has a fee involved.

Is it necessary to get permission from the Seller/Developer to assign the Agreement of Purchase and Sale?

You need to consult the Agreement of Purchase and Sale. Generally, Developers will not permit assignments without the Developer's consent, therefore every situation requires consultation with the Developer and your lawyer. Please note, there have been incidents where an unauthorized assignment has resulted in termination of the original agreement and the withholding of the deposit.

Can an Agreement of Purchase and Sale, involving any type of real estate transaction, be assigned?

Under normal circumstances, any Agreement of Purchase and Sale can be assigned providing that agreement doesn't prohibit assignments.

Remember... with New Build Assignments almost all of them will require the builders permission

Is there a form for assignments?

Yes, there are two: OREA Form 150 Assignment of Agreement of Purchase and Sale Condominium and OREA Form 145 Assignment of Agreement of Purchase and Sale (including applicable schedules.).   DO NOT USE A STANDARD CONDOMINIUM AGREEMENT OF PURCHASE AND SALE.

Lawyer Approval
It is essential that the Assignor and Assignee each retain a lawyer with expertise in this area of real estate.

Can the Assignor's REALTOR® market on the MLS?

It all depends on whether the developer permits advertising of the assignment. Refer to the original Agreement of Purchase and Sale to see if there are any prohibitions against listing the assignment or consult the Developer (Most Agreements of Purchase and Sale contain such a prohibition).

What if the construction, occupancy, closing, or unit transfer date is delayed?

In the event of a delay, the assignment is still valid: the Assignee has agreed to take on their agreement and all responsibilities involved in it.

What if the Assignee doesn't close?

This is no different than in any sale. The Assignor in most cases is not released from the obligations under the Agreement of Purchase and Sale. Accordingly, both the Assignor and Assignee will be liable.

What is the cost of assigning an Agreement of Purchase and Sale?
If the Developer consents to an assignment, there will generally be an administration fee and legal fees. These fees will vary. Consult the original Agreement of Purchase and Sale and the Developer.  Typically the Seller or Assignor is responsible for the fee.  Be sure to clarify that in the assignment agreement.

When does the Assignor get their money?
In an assignment, depending on the closing date and the terms of the assignment agreement that Assignor and Assignee agreed on, the Assignor is usually paid when:

a) the Assignee gets possession or occupancy or,

b) when the original seller approves the assignment, if applicable or,c) when the Assignee obtains legal title.

How does the REALTOR® deal with financing?
A standard financing clause may be used.

It is important to note that depending on the timing of final close the Assignor may want the agreement structured in such a way that the deposit they placed on the unit is reimbursed ahead of the profit at final closing.  If this is the case your buyer/assignee needs to discuss with their mortgage broker as a lending institution may not be willing provide those funds as part of the financing.  Your buyer/assignee may need to have that cash on hand.

Who gets the interest, if any, payable by the Builder on the original deposits?
Unless otherwise specified, the interest is likely to be paid to the Assignor.

What closing fees are payable?
See the Condominium Assignment Basic Guidelines, found below.

Who pays the interim occupancy costs?
Once assignment is finalized, the Assignee will typically pay occupancy costs through to the final closing and will pay the final closing costs unless specifically negotiated otherwise.

Does the Assignor have to claim Capital Gains for tax purposes?
Clause 10 of Form 150 addresses capital gains for non-residents. Whether a resident or non-resident, the Assignor should discuss this question with a tax advisor.

Any assignment offer should contain a condition of solicitors review by both the Assignor and Assignee.

It should also include a condition on builders permission to assign

It should also clarify the any builder's cost associated with the assignment should be the responsibility of the seller

It should include the Assignor providing the Assignee with a copy of the Original Agreement of Purchase and sale (The assignee's lawyer will want to review this along with the Assignment agreement).

IT IS CRITICALLY IMPORTANT that anyone considering an assignment purchase has legal counsel that is familiar with the process.  That solicitor can recommend their preferred clauses in advance of assignment offer submission.

Once we have the exclusive assignment listings on our HouseSigma platform, it means that our users can submit leads for these exclusive assignment listings.

You will be able to recognize a lead for an exclusive assignment listing when you see [exclusive assignment] in the messaging (See Fig 3). You may also get a lead alert for an exclusive assignment listing from one of your currently assigned leads. 

The process of handling assignment lead can be very different from resale leads.

Please make sure you can service the client with quality by becoming confident with the information above and seeking help where needed.

If you are not confident with handling exclusive assignment leads, we encourage you to leave it for another agent to claim

Internal Details on the Exclusive Assignment Listings

If inquired by a lead or your client, you can find out more internal information regarding these exclusive listings via our internal dashboard (See below for a step-by-step guide to access internal details such as co-op fees and listing agent office contact information under Internal Remark )